Bear Stearns Cos., a Wall Street investment bank, Wednesday said it faces a possible U.S. Securities and Exchange Commission enforcement action and fine over improper mutual fund trading.
The company said the agency has authorized staff to bring an enforcement action against the company and its Bear Stearns Securities Corp. unit. It said this could lead to the repayment of ill-gotten gains, civil monetary penalties or other sanctions.
Bear Stearns said it believes it has strong defenses to potential claims and intends to continue talks with the agency. It did not immediately return a call seeking further comment. The company disclosed the matter in an SEC filing.
In February, the SEC fined Wall Street brokerage Brean Murray $150,000 for improper trading of mutual fund shares on behalf of several hedge funds.
The SEC said Brean handled the trades through an unnamed clearing firm. Bloomberg News at the time said the SEC concluded that Bear Stearns violated federal investor protection laws by helping brokers conduct “late trading” in fund shares. It said a lawsuit filed in a New York state court implicated Bear Stearns in the Brean Murray case.
